Auto financing drops marginally month-on-month

Auto financing sector amounted to Rs352 billion at the end of January 2022, up 34% year-on-year, revealed data released by the State Bank of Pakistan (SBP). However, on a monthly basis, auto financing recorded a marginal drop of 0.4%, as compared to Rs354 billion in December 2021, showed the central bank data.

The monthly decline comes as auto sales in Pakistan, including car sales of non-PAMA members, clocked in at 24,000 units, showing a decline of 25% on a month-on-month basis in January 2022.

“The decline in the month-on-month sales is due to high base and pre-buying on anticipation of price increase by auto assemblers,” said Topline Securities.

A number of auto manufacturers in Pakistan including Honda, Suzuki jacked up their car prices, owing to an increase in Federal Excise Duty (FED) announced in the Finance (Supplementary) bill 2022 last month.

“Due to the recent mini-budget, the government increased different taxes on almost all variants, so Pak Suzuki has increased only those taxes,” said PSMC in a statement then.

Meanwhile, as per SBP data, house building financing stood at a record level of Rs151 billion by the end of January 2022, increasing by 72% as compared to Rs88 billion recorded in the same month last year. On a monthly basis, the house building financing was up 5% as compared to Rs144 billion recorded in December 2021.

The increase can be attributed to a number of measures to promote housing and construction of buildings in the country.

Last month, the SBP announced an increase in the mandatory target for the financing of housing and construction of buildings from 5% to 7% of their domestic private sector credit.

Furthermore, financing for personal loans stood at Rs244 billion, up 9.7% YoY as compared to Rs223 billion, while declining by 0.3% MoM as compared to Rs245 billion, showed SBP data.